asked the Minister for the Environment the present interest rate being charged by the Housing Finance Agency; if he will give details of any changes in interest rates which have taken place since the commencement of Housing Finance Agency loans and the recent bond issue by the Housing Finance Agency; and the reason the cost of finance has again increased.
Written Answers. - Housing Finance Agency.
622.
The rate of interest charged on Housing Finance Agency loans is the rate of inflation for the year to mid-May, plus a percentage determined by the agency from time to time to cover its costs, including the cost of funding loans, administration expenses and the cost of mortgage protection insurance for borrowers. On loans issued up to 1 July 1983 the percentage above inflation is fixed at 3.23 per cent. On loans entered into on or after that date the percentage above inflation is variable. The tables below set out the actual interest rate applied to loans by the agency since its inception:
Loans entered into before 1 July 1983
|
Interest Period |
Percentage above inflation |
Inflation |
Actual Rate |
|
to 30th June 1983 |
3.25% |
9.2% |
12.45% |
|
1st July 1983 — 30th June 1984 |
3.25% |
9.7% |
12.95% |
|
1st July 1984 — 30th June 1985 |
3.25% |
Not yet available |
Loans entered into on or after 1 July 1983
|
Interest Period |
Percentage above inflation |
Inflation |
Actual Rate |
|
1st July 1983 — 30th July 1984 |
4.25% |
9.7% |
13.95% |
|
1st July 1984 — 4th November 1984 |
4.25% |
Not yet available |
|
|
5th November 1984 - 30th June 1985 |
5.00% |
Not yet available |
The most recent stock issue by the agency was a tranche of £30 million of 2 per cent index linked Housing Finance Agency stock 2008.
The increased cost of funds to the agency is attributable to conditions on financial markets and the prevailing level of real interest rates.